Eﬃcient or ineﬃcient use of a speciﬁc component of variable overhead (e.g., electricity) will cause the ﬁrm to have a variable-overhead eﬃciency variance.

Question

Quizplus · Accepted Answer

This statement is true as the variable-overhead efficiency variance measures the difference between the actual variable overhead used and the expected or standard amount of variable overhead used for the actual level of production. So, if a specific component of variable overhead, such as electricity, is used efficiently, it will result in a favorable variance, and if it is used inefficiently, it will result in an unfavorable variance.

Eﬃcient or Ineﬃcient Use of a Speciﬁc Component of Variable